Regular Industry Development Updates, Opinions and Talking Points relating to Manufacturing, the Supply Chain and Logistics.

Click Here to Add Blockchain to Your Order

22-Feb-2018

by Susan Galer

Business Analyst, SAP

Ordering a gift online takes seconds, setting in motion a highly complex dance among manufacturer, shipping company, banks, and regulatory authorities to deliver that item to the consumer’s front door.

In this video interview at SAP TechEd Barcelona, Stefan Foerster, product manager for SAP Transportation Management, showcased an intriguing example of how blockchain could make international trade more efficient and secure.

Huge Cost-Cutting Potential
Buyers and sellers alike are looking at blockchain to lower costs by digitizing paper-based processes, streamlining collaboration to speed up payments for goods shipped and delivered.

“We’re talking with shippers who are interested in blockchain because right now it’s costly and time-consuming relying on paper-based processes,” said Foerster. “If you have 20,000 containers you’re dealing with pages of bills of lading, and exchanging numerous emails, PDF and other documents with many parties including banks, regulatory authorities, and other transportation companies. Blockchain saves valuable time automatically and securely obtaining required stamps, signatures, and other documentation from various places.”

He added that blockchain’s transparency could give banks fact-based visibility into risk as they issue credit on goods: “It’s not unusual for banks to finance the same cargo twice because various employees are working on the same shipments but may not be communicating with each other.”
Fighting Fraud
Stolen freight is a major problem at many ports of destination with manipulated documents supporting fraudulent container pick-ups. Foerster said blockchain could address this problem.
“Blockchain authenticates every document and transaction throughout the route,” said Foerster. “Our POC actually uses the truck driver’s mobile phone to validate the operator and goods to be picked up in real-time.”
Smart Contracts
Future capabilities include using smart contracts on blockchain-enabled networks that automatically trigger activities. Companies could build in a lower prices and bonuses for early or on-time shipments, while late deliveries incur penalties. Adding in sensor-based IoT technology that tracks cargo temperatures and/or travel routes provides further incentives and controls.

“The digitalized contract with code on a blockchain would motivate sellers to streamline shipments while adhering to agreed-upon safe handling and other policies,” said Foerster. “Banks and insurance companies could better measure risk, and incent shippers to minimize it by following safety procedures or making decisions such as steering routes away from known high-pirate areas.”

Foerster said SAP is validating proof of concepts (POCs) with customers and partners, and has also launched a blockchain co-innovation program to share ideas and build an expert community.